Key Retirement Solutions’ Market Monitor has seen the market pick up by nearly 10 per cent year to date, with over 22,600 plans worth more than £1 billion, taken out so far in 2007.
In addition to this, a greater share of equity release business is now coming from the intermediary market, as opposed to direct from providers.
The trend is expected to show that by the end of 2007, over 60 per cent of new business will be generated by intermediaries compared to 40 per cent in 2005. This will mean that intermediaries this year will write in the region of 6,000 more plans due to this change.
The demand for drawdown policies is also continuing to increase, now accounting for nearly half of all plans (48 per cent) compared to 19 per cent last year, while the age of the average equity release customers continues to fall - currently at 68 years old.
The standard lifetime mortgage, where the whole loan is advanced at the outset, now accounts for just 46 per cent of all lending, down from 74 per cent in the first nine months of 2006. Home reversion plans have dropped slightly to 5.4 per cent of total lending compared to 7.1 per cent.
Dean Mirfin, business development director at Key Retirement Solutions commented: “The report shows that demand for equity release continues to grow in all regions of the UK, despite the volatility in the credit markets and speculation over movements of the base rate over the last few months.
"While rates for some products have increased, borrowers have been able to take advantage of some very competitive deals, particularly if they seek advice from a specialist adviser. Conditions in the market remain positive, and we expect that the last quarter will produce strong results.”
Mirfin continued: “The strong growth in demand for equity release plans highlights the greater awareness the industry has gained and how it continues to develop. Better flexibility and more transparent products have considerably shifted the normal equity release trends, and helped make it a suitable option of many more people to access the money locked in their homes.”
Across the UK, demand for equity release is up in every region. The South East continues to dominate with more than 4,780 plans taken out, and at the highest value - £260 million (compared to £228m in 2006). The South West at £150m and London at £149m, were the next highest regions for the amount released. The North West, with 3,156 plans taken out so far in 2007, and the South West, with 2,756, were again in second and third place respectively for the number of plans sold.
Northern Ireland has experienced spectacular growth to date in 2007, with more than £13m released compared to just £3m over the same period last year, with an almost threefold increase in the number of plans. This reflects the rapid rise in Northern Ireland’s property prices, improved availability of equity release products and an expansion in the number of advisers operating in this area.
Equity release also continues to gain in popularity in Scotland, with both total lending and the number of plans taken out seeing more than double the levels compared to the same period in 2006. Surprisingly the average amount released in Scotland fell by 10 per cent year on year from £43,000 in 2006 to just under £39,000 in 2007.
Two regions bucked the trend and experienced a marginal drop in the number of plans compared to last year: the North West (-5.5 per cent) and the West Midlands (-9 per cent). However even in these regions total lending was up due to the growth in average value released.
